The Indian organic packaged food market is expected to exceed Rs 871 mn by 2021 from Rs 533 mn in 2016, attaining a growth rate of 17%, according to a joint study ASSOCHAM-Ernst & Young.
The substantial growth of this sector is attributed to an expanding urban population base, rising health concerns, growing consumer spending on food products and deterioration of food quality, the joint study noted.
Organic packaged food and beverages is an emerging niche market in India and its primary consumers are high-income urbanites. As demand for organic food in the metro cities increase, the companies in this sector are witnessing notable growth with the entry of several new players in the organic food market such as Conscious Foods, Sresta, Eco Farms, Organic India, Navdanya and Morarka Organic Foods, said the ASSOCHAM-EY joint report titled, ‘The Indian Organic Market: A new paradigm in agriculture’, which was released during the conference: ‘Organic World: Advantage India’, today at New Delhi.
India-based Sresta Natural BioproductsPvt. Ltd. has emerged as the market leader, with 37% value share of the packaged organic food market and 7.8% share of the packaged organic beverage market. It has increased its share in the organic food market in recent years, while smaller niche players have taken significant share away from it in the organic beverage market, adds the study.
“In addition to the growing domestic market, India is the second largest exporter of organic products in Asia after China. The increasing export market coupled with the Government’s support has made organic cultivation in India highly successful”, said Amit Vatsyayan, Partner, EY. Indian organic food exports were estimated at US$299 million during 2015-16 with total volume of 263,688 MT.
The major export destinations were the US, European Union, Canada and New Zealand. It is assumed that most of the remaining quantity is sold in local markets. Oilseeds comprised half of India’s overall organic food export, followed by processed food products at 25%, noted the paper.
According to ASSOCHAM-EY study, India currently holds the ninth position among 178 countries that actively practice organic agriculture. At present, the country is home to more than 835,000 organic producers, 699 processors, 669 exporters and 1.49 million ha area under organic cultivation. However, with only a meagre 0.4% of the total agricultural land area designated for organic cultivation, the industry presents extensive scope for expansion.
India has a remarkable potential to produce all varieties of organic products, owing to the existence of various agroclimatic zones within its borders. The total area under organic certification was 5.71 million ha in 2015-16. This included 26% cultivable area with 1.49 million ha and 74% (4.22 million ha) forest and wild area for collection of minor forest produce.
Among the states, Madhya Pradesh has the largest area under organic certification (4.62 lakh ha) followed by, Maharashtra (1.98 lakh ha) Rajasthan (1.55 lakh ha), Telangana (1.04 lakh ha), Odisha (0.96 lakh ha), Karnataka (0.94 lakh ha), Gujarat (0.77 lakh ha) and Sikkim (0.76 lakh ha). These states had a combined share of 90% of the area under organic certification in 2015-16, highlighted the study.
In terms of organic crops, the combined share of the top 10 categories of organic food crops is around 99%. The top four categories (with a share of around 85%) include sugar, oilseed, fiber and cereals and millets.
“According to our findings, metropolitan cities have witnessed a 95% increase in demand in the last five years,” said Mr. Vatsysyan. “Many organic food companies are adopting the online route to expand their consumer base. The brick and mortar organic stores are usually located in metro and mini metro cities. These companies are reaching out to the rest of the consumers through online channels,” he added.